Pandey told the audience that mutual‑fund houses and insurers now routinely invest in securities issued by banks and corporations, while banks themselves are increasingly active in capital‑market activities, creating a web of inter‑dependence that was once rare.
He warned that this growing interconnectedness means a disturbance in one segment – for example a liquidity crunch in the banking sector or a market‑wide sell‑off – could quickly spill over into other parts of the system, making it impossible for any single regulator to contain the fallout in isolation.
The SEBI chief highlighted that the financial ecosystem also shares common payment infrastructures, digital platforms and technology networks, which further deepens the links between institutions and amplifies the potential for systemic risk.
“Financial stability, cyber resilience and operational resilience cannot always be viewed through individual institutional or regulatory silos,” Pandey said, urging regulators and market participants to collaborate more closely on monitoring and mitigating cross‑market risks.
Pandey’s remarks come amid global concerns about the speed at which capital can move across borders and asset classes, and they underscore the regulator’s push for coordinated oversight mechanisms that can respond to multi‑sector shocks.